Board Communique: January 11, 2021
BC’s Public Service Pension Plan is fully funded: 2020 valuation results now available
The Public Service Pension Board of Trustees is pleased to announce the Public Service Pension Plan 2020 valuation shows the plan funding ratio is 109.6 per cent.
Valuations are a snapshot in time that assess the financial stability of the plan. The plan’s actuary (a specialist in financial modelling, statistics and risk management) conducted the new valuation as at March 31, 2020. The valuation measured the plan’s actuarial liabilities and compared them to actuarial assets. This means the cost of paying benefits (liabilities) was checked against how much the plan is estimated to have available in investments and contributions (assets) to pay those benefits.
The valuation showed plan actuarial assets of $30.5 billion, exceeding actuarial liabilities of $27.8 billion, leaving the plan with surplus funds of $2.7 billion.
The 2020 valuation results show the plan continues to be well funded. The next valuation will occur in 2023.
What this means for non-guaranteed benefits
Inflation adjustments for retired members
Annual inflation adjustments to retired member pensions are a valuable but non-guaranteed benefit of the plan. The valuation process showed the plan’s inflation adjustment account remains well funded and full inflation adjustments are sustainable. We anticipate retired plan members will continue to receive annual inflation adjustments in line with the annual changes in the Canadian consumer price index.
Group health benefits for retired members
The plan offers an optional group benefits program for retired members. This program has a different funding model and is not related to the plan’s valuation results.
What happens next
When there is a valuation surplus, we use the plan’s Joint Trust Agreement to help guide our decisions in the use of that surplus. The Joint Trust Agreement is a document established by the plan partners (the provincial government and the BC Government and Services Employees’ Union), and it gives us guidelines on how to manage the plan.
We are now carefully examining the options available to us under the Joint Trust Agreement. It is important that whatever decisions we make be sustainable and equitable to members and employers. We will provide an update when we have made any decisions.